Wind’s exit opens field for Quebecor expansion, analysts say

Quebecor Inc., whose Videotron unit was the best-performing mobile-phone company in Canada last year, is emerging as the possible fourth major operator the government has long sought.

Montreal-based based Quebecormay take advantage of weak interest in the federal government’s spectrum action to snap up wireless licenses across the country, Greg MacDonald, a Toronto-based analyst with Macquarie Group Ltd., said by phone Thursday.

The media company offers Internet, cable and mobile-phone service under the Videotron brand in the province.

Quebecor is “the most logical candidate” to be Canada’s fourth national carrier, Marc L’Ecuyer, a fund manager at Cote 100 Inc. in Saint-Bruno, Quebec, said by phone. “They have a strong base in Quebec, and they could do a partnership with another player to gain national scale.”

Canada’s government has offered preferential access to spectrum for new entrants in a bid to challenge the dominance of Telus, Rogers and BCE Inc., which together command 90 per cent of customers. Lack of interest from international players Verizon Communications Inc. and VimpelCom Ltd., means incumbents may be able to buy spectrum at bargain prices at the auction that began this week.

Bidders are likely to buy blocks of premium spectrum close to the $162 million starting price, MacDonald said.

Quebecor has also signed a nondisclosure agreement with struggling phone company Mobilicity in an effort to gain operating licenses outside the province, Jeff Fan, a Toronto- based analyst with Scotia Capital Inc., said in a Jan. 10 note to clients.

Martin Tremblay, a spokesman for Quebecor, declined to comment on whether it had signed a nondisclosure agreement with Mobilicity and said government rules forbid it from speaking about the auction while it is under way. Joel Shaffer, a spokesman for Mobilicity, also declined to comment. Mobilicity is the brand name of Vaughan, Ontario-based Data & Audio Visual Enterprises Wireless Inc.

Wind Mobile, the largest of Canada’s new entrants with 650,000 subscribers, pulled out of the auction on Jan. 13, hours before it was set to start. Its backer, Amsterdam-based VimpelCom, said it wouldn’t fund the bid, Wind Mobile chief executive officer Tony Lacavera said in an e-mailed statement.

Four mobile-phone companies in each of the country’s major markets will help “support more choice in our wireless market while putting the interests of consumers first,” Industry Minister James Moore said a Jan. 13 statement.

The last auction, in 2008, raised $4.3 billion for the government. Fan said in his note that this round may only net $1.8 billion. Jake Enwright, a spokesman for Industry Canada, declined to say how much revenue the government hopes to raise through the auction.

“There is an absence of qualified bidders remaining in the auction,” MacDonald, at Macquarie, said. Quebecor could pick up premium spectrum at a discount across the country, he said. “No other bidders may be bidding against them.”

Quebecor CEO Robert Depatie has already shown he’s willing to spend heavily on sports and other media content that can be packaged and sold on smartphones and tablets to boost consumer spending.

Depatie quadrupled profit at the company’s cable unit before becoming CEO in May 2013. Since then, he has closed unprofitable newspapers owned by the company and joined with Rogers in a $4.9 billion deal to buy exclusive broadcast rights for National Hockey League games.

At the end of Sept. 30, Videotron had 478,000 mobile customers, up 26 per cent from a year before, according to the company’s third-quarter earnings report.

More on thestar.com

We value respectful and thoughtful discussion. Readers are encouraged to flag comments that fail to meet the standards outlined in our
Community Code of Conduct.
For further information, including our legal guidelines, please see our full website
Terms and Conditions.